Output of eight infrastructure sectors contracts by 38.1% in April

During the month of nationwide lockdown, cement and steel output shrank 86% and 83.9% respectively, while electricity and coal output fell 22.8% and 15.5% respectively

India’s eight infrastructure sectors contracted by a record 38.1% in April as the economy came to a halt due to the nationwide lockdown imposed to contain the spread of the covid-19 pandemic.

During the month, cement and steel output shrank 86% and 83.9% respectively, while electricity and coal output fell 22.8% and 15.5% respectively. India’s April PMI had fell to a record low of 27.4 while merchandise exports contracted by 60% during the same month.

Although the government has eased restrictions in the current phase of lockdown which is scheduled to end on 31 May, and allowed businesses to restart operations, India’s more than two-month-long lockdown and flight of migrant workers from urban and industrial centres have crippled economic activity. Goldman Sachs has pointed out that India’s stringent lockdown and tepid fiscal support, small compared with even other emerging economies, may lead to GDP contracting by a massive 45% in the June quarter.

Professional forecasters veered towards a consensus that India’s economy will face its worst recession in 40 years, contracting by at least 5% this fiscal. On Thursday, S&P Global Ratings said the Indian economy will contract 5% in FY21, assuming that the ongoing outbreak in India will peak in the September quarter while Swiss bank UBS said India’s economy could shrink 5.8% during the current financial year amid weaker-than-expected domestic economic activity and the ongoing global recession. Earlier, S&P’s Indian arm Crisil, Fitch Ratings and Goldman Sachs projected India’s economy to contract 5% in FY21.

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